Parimutuel Betting is an ingenious method, popularly used throughout the world, of pooling bets placed on horse races so as to ensure that bettors are given fair payoff odds and that both the “house” and any applicable taxes are covered before paying out any winnings. The word “parimutuel” itself is a French term that translates to “mutual betting”, which sums up the practice nicely.
Pari-mutuel betting is used not only in horse racing, but in similar sports such as harness racing, dog or greyhound racing, jai alai and other sports where the finish is recorded in a set order. Parimutuel betting has also been adapted to several popular lotteries whose payout will change from game to game depending on how many tickets are purchased. In horse wagering, the final payoff is not precisely determined until all bets are taken and betting is closed. This distinguishes it from fixed odds betting, a system that states the actual odds before wagering begins.
Parimutuel betting was invented in 1865 by Joseph Ollers, a perfume maker from Paris who had a knack for figures and enjoyed gambling in his free time. Ollers was challenged to come up with a betting system that would ensure that bookmakers received a fixed profit while at the same time retaining the fairness and transparency that bettors demanded. The intricate calculations required as betting amounts rose and complex winning formulas were devised, led to the invention of mechanical calculators called “totalisators”, or “tote boards”, in the early years of the 20th century. The first tote board used in the United States made its appearance at Chicago’s Arlington Park in 1933.
The system of parimutuel betting and its undisputed fairness has helped bring horse wagering into a more favorable light, compared to other forms of gambling. As well, the attributes of pool betting have given rise to a bewildering variety of payoffs that have gone far beyond the usual Win, Place or Show. Occasionally, someone will win a huge payoff on one of these so-called Exotic Bets and the story will be covered in the news media.
All in all, it can said that parimutuel betting has done much to boost horse wagering and horse racing itself into the respected position it holds in today’s sports and entertainment spectrum.